Question

(c)

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Prepare a CVP income statement for current operations and after Mary's changes are introduced.
v
MARIGOLD SHOE STORE
CVP Income Statement
Current
New
Sales
$800,000
$912,000
जी
Variable Expenses
$480,000
$576,00
Contribution Margin
$320,000
$336,000
Fixed Expenses
$270,000
$294,000
Net Income/(Loss)
$50,000
$42,000
$
Would you make the changes suggested?
No​

Answer 1

The changes suggested increase income by 16,000 therefore is a good idea to made the changes

Step-by-step explanation:

Your Mistake is that fixed expenses should remain constant with a sales increase

Current New

Sales $800,000 $ 912,000

Variable $ 480,000 $ 576,000

Contribution $ 320,000 $ 336,000

Fixed $ 270,000 $ 270,000

Net Income $ 50,000 $ 66,000